no! it won't!..
indonesia economy power still too small to cause contagion..
we can talk about it when indonesia is top 5 global economy power..
Yes, you are right. But the size of the Indo economy is not the only reason.
Is Indo a major source of FDI for the region? No
Is Jakarta a financial centre? No
Are the fundamentals of the Indo economy same as the other economies in the region? No
Indo is a commodities driven economy and like @
Viet says it is very reliant on commodity exports to China. So naturally it will follow different cycles to other, more manufacturing based economies in ASEAN.
Invest to where exactly? Socialist Vietnam, 60-40 Philippine, Broken down Myanmar, Bumiputra Malaysia. Only Thai & Cambodia that will probably get the benefit & that's a big if.
Yes. All those countries you mention would benefit. But don't take my word for it. Let the bond markets have the final word.
Indonesia
Malaysia
Phillipines
Singapore
Thailand
Viet Nam
Do you notice the huge spreads between Indo treasuries against other ASEAN? That shows that investors don't consider the fundamentals of the ASEAN region to be the same and consider the other economies to be less risky. Even Vietnam has a lower cost. BTW look at how much the cost of borrowing for Vietnam has fallen. Impressive stuff.
Now look at the credit default swap spread.
Indo is the blue line. This means that insurance for Indo debt is higher than for any other regional country. Does that look like a regional leader? Compare against Germany who are an actual regional leader :
Indonesian woes, ASEAN problems | The Japan Times
Simpleton... With the AEC coming up next year what do you think will happen if the largest economy in the region tank? There will be a massive distrust toward anything ASEAN.
The guy in the op-ed seems to be making is that Indonesia is more like a bellwether for the region. That investors seem to see the region as a whole seems to be contradicted by the market. But then it's an op-ed so you can't really depend on it.
Now, I ask you again, explain to me how Indo tanking would drag the region down. Hint: you can't because it's too simple a question.
Let's look at FDI in the region and who the big player is. Here is a note from a SEA based consultancy:
Foreign Direct Investment in ASEAN – Key Findings - ASEAN Business News
The ASEAN region has been the largest recipient of FDI, relative to gross domestic product (GDP), in Asia Pacific. Between 1952 and 2012, Singapore accounts for more than half of total FDI to the whole region (52 percent). Thailand ranks the second with a 13 percent share, followed by Indonesia with 11 percent, Malaysia with 10 percent, Vietnam with 8 percent and the Philippines with 3 percent.
The European Union, Japan and the United States continue to be among leaders in providing sources of FDI to ASEAN. In particular, the European Union contributes a 25 percent share to the total FDI sources, followed by Japan with 13 percent and the United States with 11 percent. It is notable that FDI sources coming from the United States has relatively decreased, while intra-ASEAN FDI has grown rapidly, with Singapore serving as the main source of this FDI inflow.
So, Indo is the largest economy but not integrated enough to be a source of contagion. Infact, investors might actually see other SEAsia countries as alternatives rather than compliments - this has been the trend since 1997. Now take this in before you spout more ignorance.